Call for action for licensees to improve compliance practices
Licensees are being urged to be more flexible with their compliance obligations as advisers say they have lost sight of how the rules actually work.
Appearing at the ifa Adviser Innovation Summit, Corey Wastle, chief executive of Verse Wealth in Melbourne, discussed the compliance obligations imposed on advisers by their licensee.
He said advisers could be so tied up with the licensee and ticking boxes that they lose sight of why the compliance existed.
“For a very long time, whatever the licensee policy was is what I did and I didn’t understand the rules beneath it. Licensing policies are fantastic, we need people to help us interpret things, we need to be able to scale, and we need people to help us, but did we lose sight of how the rules actually work? Did we even know them in the first place? Or did we just do what we were told at the time?”
Also appearing on the panel, financial adviser Nathan Fradley, added: “This word ‘compliance’ has been weaponised. I feel like advisers would outsource the knowledge of what we had to do out to compliance teams, instead of working with compliance to help us make better decisions.”
However, with the advent of the Quality of Advice Review (QAR) suggesting the Statement of Advice (SOA) is replaced with a more informal document or is provided in a different format, it is time for licensees to change. In the final response to the QAR, Minister for Financial Services, Stephen Jones, said SOAs will be replaced by an advice record that provides information in plain English.
The removal of the SOA had been a recommendation made by Michelle Levy in her final QAR as it was her impression that a one-size-fits-all document was unsuitable. The government agreed with this but opened consultation on what the new “fit for purpose” advice document could look like.
Fradley said: “The level of detail that needs to be included is generally what a person would reasonably require to make a decision about whether to follow that advice as a retail client. When you take that lens and look at the traditional SOA, there is so much excess about that threshold.”
Wastle said: “A lot has changed, we’ve professionalised in so many ways, the barriers to entry have gone up and we’ve shed that sales culture of product-based advice. It’s time for us to shrug off that compliance-led thinking and move closer to the regulation as opposed to the complexity of licensing standards.
“This is a call to action for licensees not to wait until the Quality of Advice Review comes in and see what happens; do it now.”
The new SOA could also include a video format, as there are no specific requirements in RG175 for the documents to be provided in written form. Wastle and Fradley both agreed the term “video SOA” was outdated and misleading, but that the medium was an option, with Wastle close to launching his own version of video SOAs for his clients which will be called Summary of Advice.
He said: “There’s a lot of assumptions out there about them; the first one is that you can do away with advice documents and it becomes a video. You have to think about video on a spectrum, at one end you have a video with all the content requirements of a compliant SOA, and at the other end you have a traditional SOA with pages of jargon and unnecessary content.”
AUTHOR
Laura Dew
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I thought you joined a dealer to be protected and have a better version of regulation explained, BUT The dealers themselves in those days were apprehensive of the regulations them selves.I also found in some cases the dealer thought they were a better stock picker than a fund manager?
As for sales what has changed is the adviser is now selling his organization against the rest.
Look at young lawyers , they often fail because the can not bring enough business into the practice
they can't sell them selvesNO GOVT WILL EVER STOP SALES, THE WORLD REVOLVES AROUND IT.